Casket Controversy : A cut-rate retailer is disliked by funeral directors and shunned by some suppliers.

It is the sort of window display that stops you dead in your tracks: Soft back lighting, discreet potted plants--and shiny, open coffins with names such as “Emerald Mist,” “Lord’s Last Supper” and “Going Home.”

The windows in question are on Main and 9th streets in downtown Santa Ana, where Hillmark Casket Gallery opened its doors seven weeks ago to a hail of outrage from the funeral industry.

Sheralee and Kyle Nyswonger own the Santa Ana store and its sister casket shop in Loma Linda in San Bernardino County, which industry watchers say are the only strictly retail casket establishments in the nation. To the Nyswongers, Hillmark is a way to make a living while helping the grief-stricken save money at a time of great sadness and expense.

But to the close-knit funeral industry, the Nyswongers are virtually committing blasphemy--disrupting the tidy supply chain that traditionally links casket makers and funeral directors and underselling the competition in the process.

Tempers are so hot that Ron Hast, publisher of Mortuary Management magazine and a partner in Abbott & Hast Mortuary in Los Angeles, likens the young entrepreneurs to “wholesale butchers,” and the nation’s largest casket makers are refusing to supply Hillmark, citing longtime policies of dealing only with licensed funeral directors.

Buying a casket from the Nyswongers “would be like going to a restaurant and saying, ‘I want your chef’s ability to serve fine meals, but I want to bring my own steak, because I can get it cheaper at the butcher shop,’ ” Hast said.

In fact, when a consumer buys a casket at a retail establishment, most funeral homes tack on “handling fees” of up to $1,000. Funeral directors, therefore, contend that retail casket companies make dying more--not less--expensive. But the handling fees are under review by the Federal Trade Commission, which investigates unfair and deceptive business practices.

Nyswonger’s response to comments such as Hast’s is a shrug and a smile. After all, she concedes, if the burial industry is in such an uproar, then she must be doing something right. The Nyswongers sell their caskets for $489 to $1,530, which she says beats funeral homes’ prices by 30% to 40%.

She said she has already received about 100 requests for distributorships from throughout the nation. And the 9-month-old Loma Linda store should bring in $250,000 in sales its first year of operation. Nyswonger views these as good indications that she was right to sell caskets instead of styling hair or selling flowers.

“We work within peoples’ budgets,” she said. “I wouldn’t want to have to bury my husband and scrimp and save to buy him a casket. Services are expensive enough. A full-service funeral costs $5,000.”

By buying a casket at Hillmark, she said, a family can save in the neighborhood of $1,000. “That’s why we’re in business.”

Until 1988, Sheralee Nyswonger, 26, had spent most of her short career working in florist shops arranging flowers and in medical offices processing records. Kyle Nyswonger, 30, was the sales manager for an automobile dealership, a post he still holds.

When the entrepreneurial spirit hit, Sheralee Nyswonger said they first thought of more traditional businesses, but “we decided there’s a hair salon or a florist on every other corner.” Processing medical records gave her some knowledge of the costs of death to a family, she said, costs that she realized could be lessened.

In addition, “people are more shopping- and price-conscious these days,” she said. “If they know they can get something at Price Club, they’ll go there and not to a department store.”

It took two months for Sheralee Nyswonger to persuade her husband that they could make a profit in caskets. On Nov. 11, 1988, the first Hillmark Casket Gallery opened in Loma Linda. Its profits, she said, are bankrolling the new Santa Ana shop.

But while she thought she was getting into “a nice, quiet business,” she has found out otherwise. On the Loma Linda store’s opening day, she said, the owner of a local mortuary stormed into the shop, demanding to know the identity of Hillmark’s casket suppliers.

“When my husband asked him to leave, he said, ‘No,’ ” she recalled. “He left when we were dialing the sheriff’s office.”

Costs Tied to Caskets

Relationships with local vendors have been equally difficult. Casket manufacturers traditionally sell their wares wholesale directly to funeral homes. George Lemke, executive director of the Casket Manufacturers Assn., said wholesale casket sales in the United States range between $830 million and $850 million annually.

Funeral homes mark up casket prices to cover a wide variety of operating costs. Because the coffin is the major piece of merchandise funeral homes sell, many tie all the overhead costs to the price of the casket, Jeanne Gilbert of the National Funeral Directors Assn. said.

The markups are necessary, Gilbert said, because funeral homes do not recover their operating costs through service charges on such items as chapel and limousine use alone. Casket manufacturers will not divulge their wholesale prices, and markups differ from establishment to establishment, Gilbert said.

“For an adult funeral, where a casket is used and there’s a visitation, the return is less than 10%,” said Lemke of the Casket Manufacturers Assn. “The average operating cost for a funeral home may be as high as $2,200 per adult funeral. If a funeral director fully recovered operating costs in service charges, the casket markups would not be nearly as high.”

Because funeral homes are casket companies’ major market, funeral directors wield a powerful influence over their suppliers.

One Delivery

Inland Casket Manufacturing Co. in Riverside stopped supplying coffins to Hillmark, Sheralee Nyswonger said, when local funeral directors found out about the firms’ relationship. “Funeral directors were no longer buying from them because they were selling to us,” she said. Peter Fishering, vice president of Inland, declined to comment.

In addition, a Riverside trucking company made only one casket delivery for Hillmark before pulling out. Ron Bredelis, owner of Inland Valley Transportation Co., said his firm transports bodies for mortuaries and does not usually deliver caskets.

“We did it one time,” Bredelis said. “I had heard it was pretty controversial with the funeral directors. Our business is not transporting caskets. We transport deceased human beings. So I decided it was better for our company not to do business with them.”

Today, Sheralee Nyswonger removes all labels from the coffins she sells and refuses to divulge her list of suppliers.

“I’m just so tired of getting beat up,” she said. “The customers like you. Everyone else just wants to cut you to pieces.”

Other casket retailers have come and gone, and the funeral industry contends that consumers have turned their backs on such businesses. Casket retailers have blamed the funeral industry for their failures.

Requires Price List

In 1984, the FTC enacted trade regulations demanding that funeral directors furnish their customers with detailed lists that break down services rendered and prices charged. The regulations also prohibit the funeral industry from misrepresenting to customers the legal requirements for burial. Embalming, for example, is not necessary under most circumstances, according to Ra’ouf Abdullah, a staff attorney for the FTC.

The 1984 rules are under review, Abdullah said, and handling fees are at the heart of the review.

“Some parties feel that handling fees are not a matter for the commission to review, that it’s a matter of the business discretion of the industry,” Abdullah said. “Other parties believe that handling fees are a device to inhibit competition in the marketing of caskets.”

Hast, the trade magazine publisher and partner in a Los Angeles mortuary, said his funeral home charges a handling fee “in the $100 category” if the casket used is not purchased through his own firm.

“I have no quarrel with a family who goes out and buys a casket somewhere else,” Hast said. “Just don’t come and impose your wants on a funeral director for his chapel or embalming or other arrangements. Stay home and do it all yourself.”

It is that kind of attitude that has made life difficult for Willis Webb, owner of Illinois Casket Co. in Chicago. Webb opened his coffin manufacturing firm five years ago and sold his wares to the area’s funeral homes. A year later, he opened a retail outlet, and his sales to funeral homes dried up.

But he is able to stay in business, he says, in part because he supplies his own caskets. In addition, there are so many funeral directors in Chicago, Webb said, that “there’s too much competition for them to solidify against someone who’s selling caskets to the public” by raising handling fees as a group.

Disliked by Directors

“We get repeat business from people who have used us before and come back,” he said. “But the funeral directors here totally dislike us and think we’re the most terrible thing in the world.”

So far, the Nyswongers have been aided by the intense competition in the burial industry in Southern California. Customers, they say, are the easy part.

One longtime Santa Ana resident visited Hillmark recently, shopping for a casket for her ailing mother. When she buried her husband four years ago, she said, she felt “raped” by the experience, by pushy sales tactics and high prices. Hillmark, she said, “is so much more pleasant.”

“My mother says, ‘Go out and save what you can,’ ” the woman recounted. “She says, ‘You have to spend the money on living, not on goodbys. Get a price list, remember the colors and we’ll talk about it tomorrow. But no purple. And no green.’ ”